Africa Economy Podcast Podcast

The CFA franc still has some good days in front of him, even by changing his name

The Franc Zone will be transformed, in particular to participate in the project of the single currency of ECOWAS whose ambition is to see the day in 2020. If France does not see any objection to this transformation, it appears obvious that it will take place in stages and over a long period of time, both political and economic obstacles are numerous.

France hears criticism and knows that there is an expectation on the transformation of the Franc Zone .

Bruno Le Maire, Minister of the Economy: " We are open to an ambitious reform of the Franc Zone. We are available and we are ready. Then it is up to the Member States to decide what they want. It's up to them and them alone. "

Paris is available, but Bruno Le Maire recalls the benefits that the Franc Zone represents. " First, it allows all Member States to work together and to further converge economies. We see that in the unstable world where we are - it's the same for the euro area - being together, it protects. The second achievement of the Franc Zone is the stability of exchange rates. This is essential to facilitate trade between states and to ensure low inflation. Finally, this area has a very good economic record, so it is also an area of ​​prosperity. "

The figures of inflation on the continent in 2018 give inflation below 2% for the Franc Zone against about 10% in other countries of sub-Saharan Africa, according to the Governor of the Bank of France, François Villeroy de Galhau .

The transformation of the CFA franc seems to have begun, probably for a long time. Romuald Wadagni, Minister of Economy and Finance of Benin and President of the Council of Ministers of WAEMU, the West African Economic and Monetary Union: " The countries have taken their responsibilities and have already taken the initiative. The WAEMU heads of state recognized that their countries would be ready in 2020 to switch to the eco currency, the currency of ECOWAS [Economic Community of West African States]. Changing money is a long process. "

The future currency of ECOWAS will have a flexible exchange rate regime, but until all 15 member states adopt the eco, it will keep a fixed regime against the euro. This expected currency change will have little influence on the financial center of the UEMOA, according to Edoh Kossi Amenounve, managing director of the BRVM, the stock exchange based in Abidjan. " I do not think there is a link between the dynamism of the stock market and the currency. The dynamism of the stock market is often driven by companies that are listed and how they pay their shareholders. We need savings that have a currency that inspires confidence and investors need to have some readability also on monetary policy. "

Yet there is a paradox: several local subsidiaries of European and French companies are shunning the financial market of the West African Economic and Monetary Union.

The Casablanca Stock Exchange or the Nairobi Stock Exchange, for example - Morocco, like Kenya, with a national currency subject to the flexible exchange rate - is more dynamic than the Abidjan Stock Exchange, because Casablanca or Nairobi has a bigger number of listed companies as the financial center of the 8 countries of the West African Economic and Monetary Union.

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